BP Links Compensation With Continued Oil Production In The Gulf

BP Links Compensation With Continued Oil Production In The Gulf

by

Dan Froomkin

The voluntary trust agreement negotiated with the Department of Justice is not with the British-based multinational, or even with BP America, but with a fairly remote subsidiary, BP Exploration & Production Inc. (BPEC) -- a Delaware corporation that operates BP's Gulf oil leases.

BP has managed to link the fate of its $20 billion oil spill victims
compensation fund with its continued ability to pump oil from the Gulf
of Mexico.

The voluntary trust agreement
negotiated with the Department of Justice is not with the British-based
multinational, or even with BP America, but with a fairly remote
subsidiary, BP Exploration & Production Inc. (BPEC) -- a Delaware
corporation that operates BP's Gulf oil leases.

So if BP's drilling revenues from the Gulf suddenly vanished, so,
presumably, would the compensation fund, said Tyson Slocum, director of
Public Citizen's Energy Program.

"This is a very advantageous agreement from BP's point of view,"
Slocum told the Huffington Post. "Because their big concern is that the
Deepwater Horizon incident would result in sanctions that would
significantly reduce BP's involvement in lucrative Gulf operations."

"But if you tie the compensation fund to Gulf of Mexico production,
you are helping to guarantee BP's continued involvement in that market,"
he said.

Technically, the agreement (exclusively available on the Huffington
Post) sets up yet another subsidiary to hold the collateral for the
compensation fund. That collateral is to consist of "first priority
perfected security interests in production payments pertaining to the
Grantor's U.S. oil and natural gas production."

"It will create a problematic situation if one arm of the federal
government is attempting to hold BP criminally accountable and includes
sanctions that would include loss of leasing rights -- while another arm
of the administration is seeking to enforce the trust agreement,"
Slocum said.

Although the same people would not be making decisions about criminal
sanctions and victim compensation, Slocum acknowledged, they all
ultimately work for the same person.

"The president's objective I think all along has been to secure
financing from BP," said Slocum. "Secondary to that is holding this
company criminally negligent for the death of 11 workers and for the
largest environmental disaster in American history."

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